What is the purpose of a closing statement in a real estate transaction?

The purpose of a closing statement in a real estate transaction is to show all cash received and paid out. This document is critical during the closing process, as it provides a detailed accounting of financial transactions between the buyer and seller. It lists all costs associated with the closing, including the purchase price, down payments, loan amounts, and various fees such as title insurance, closing costs, and agent commissions. This transparency helps both parties understand the complete financial picture of the transaction and ensures that all parties are on the same page regarding the distribution of funds.

While outlining legal responsibilities is important in a real estate transaction, the closing statement specifically focuses on the financial aspects rather than legal details. The transfer of property title is also a distinct process that involves separate documentation, specifically the deed, rather than the closing statement itself. Confirming the sale price is a part of the transaction, but the closing statement goes beyond that to encompass the entire financial exchange that takes place during closing. Thus, the closing statement's primary role is to give a comprehensive view of cash flows involved in the real estate transaction.